When the Labor government abandoned performance pay for department secretaries in 2008 and awarded them a huge six-step pay hike via the Remuneration Tribunal in 2012, not all of them, though delighted to take the money, thought it was handled in the right way.

The tribunal’s determination had been hitched to the pay rises for members of parliament and, as expected, was pushed through parliament with little scrutiny and few objections.

It did make it harder for politicians to whinge about the secretaries getting another pay rise when they would get one too.

But there were some concerns that the high salaries might be a time bomb when the time came for the public service to be slashed again.

That time is now, when savage job cuts are biting with many more to come and the Canberra economy beginning to totter.

Public servants whose jobs are being axed or spilled are wondering aloud and with mounting anger why their secretaries don’t have to contest their own jobs and why they are still getting automatic pay rises when the new government’s bargaining policy dictates that any rises for ordinary public servants (not to mention ministerial and other political staffers) must be offset by real productivity gains.

The staged pay hikes for secretaries quite deliberately did not flow through to deputy secretaries, minor agency heads and the senior executive service.

What was less understood was that they could be supplemented by further annual percentage rises, if the tribunal so decided, that could reflect public service pay rises and ensure the hard-won differential would not be eroded.

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While department secretaries’ pay doesn’t compare to captains of industry – or even some of the better-paid university vice-chancellors – they are not to be sneezed at.

The upshot is that from July 1, the secretary of the Department of the Prime Minister and Cabinet [PM&C],
Ian Watt
, will earn a package of $844,800 and the secretary of Treasury,
Martin Parkinson
, $824,320, as determined by the tribunal.

Watt then determines the salaries of the others. In order of his October determination, they are: the secretaries of Defence,
Dennis Richardson
, and Foreign Affairs,
Peter Varghese
, $798,720 each; Finance secretary
David Tune
, $757.760; then the secretaries of two groups: Health, Social Services, Industry Human Services, the Attorney-General; Education and Immigration; and Agriculture, Employment, Communications, Environment, and Infrastructure; and finally Veterans Affairs, whose secretary,
Simon Lewis
, appointed last year, will earn $665,600.

The pay rise is only part of the story.

The 2012 amendments to the Public Service Act 1999 also brought in a long list of secretaries’ roles and responsibilities and provided for an annual performance review of each secretary to be carried out in accordance with a framework established by Watt.

The legislation did not include the terms and conditions of secretaries’ employment because it restored that power to the Remuneration Tribunal.

These changes go a considerable way towards curtailing the ability of the government of the day to manipulate the system politically.

But they present a headache for the Abbott government, which wants to reintroduce performance pay for the secretaries.

Bending bureaucracy

While it might try to sneak it in by instructing Watt to assign a percentage of pay for secretaries for performance, or even to shift them on the pay scales according to performance, this would be underhand and procedurally a bit iffy, which is not Watt’s style of operating.

And he couldn’t apply it to himself and Parkinson anyway.

To reintroduce performance pay in an honest, upfront way, the government would have to make a submission to the tribunal.

The tribunal would then need to find a plausible reason why it was a brilliant idea.

Here’s why that might be embarrassing.

The Howard government used performance pay ruthlessly across the public service to bend the bureaucracy to its will.

At secretary level this, along with different lengths of appointments, resulted in the perception (at the very least) of playing favourites and dividing the cadre.

The Labor government introduced, and went on to legislate, standard five-year terms for secretaries.

And when
Kevin Rudd
moved to abolish performance pay for secretaries, he wrote to the tribunal in May 2008 seeking its advice.

The tribunal commissioned a review of secretaries’ work value by John Egan, whose 2009 report was less than flattering about the way the Coalition had applied performance management and pay.

Further, the tribunal’s own review of the office of secretary, of which the first part was published in 2010, was blunt about the inconsistency in the way both performance management and pay had been applied to the secretaries.

And it said, “The [Labor government’s] introduction of standard terms (together with the abolition of performance pay for secretaries) seeks to address perceptions that the scope of such offices to act apolitically has been eroded."